The fate of the Affordable Care Act, aka ACA or Obamacare, has been uncertain in 2017. Republicans in Congress have been determined to find a suitable replacement, but it has been a struggle. For months now, Republican legislators have taken turns drafting new bills, both in the House of Representatives and in the Senate. Each new version has faced opposition not only from Democrats, but even within the Republican Party.

While pressure mounts, mainly from the President, to put a bill up for vote, the lack of a consensus in our legislative houses is quite evident. A number of key senators have expressed specific requirements and provisions that must be included in a new healthcare law and have vowed to vote against any bill that fails to include their desired provisions. While the debate in Congress continues, we are providing you with an outline that illustrates the sequence of events that has taken place since early May, leading up to the latest developments. Since this situation is very fluid and the news reports seem to change almost daily, a timeline may help to clarify what the stumbling blocks are and why the healthcare issue presents such difficulties.

  • On May 4, 2017, the U.S. House of Representatives presented their version of a healthcare bill, known as the American Health Care Act (AHCA). While preserving many aspects of Obamacare, the AHCA presented some clear changes to tax incentives, mandates, and certain public health policies. The House-approved bill was sent to the U.S. Senate for a thorough review.
  • The Senate introduced their own rendition of a healthcare bill on June 22, known as the Better Care Reconciliation Act of 2017 (BCRA). The Senate bill immediately lacked enough Republican support to garner the required number of votes.
  • In response, the Senate unveiled a revised version of their BCRA on July 13. With hopes of satisfying concerns from both political parties, this new version included the Cruz Amendment* and additional funding for opioid treatment.
  • By July 18, the BCRA was still failing to attract enough followers for a vote. Senate Majority Leader Mitch McConnell now focused on swaying senators to vote on a bill that would repeal the ACA within two years, allowing Republicans not only time to write a more thorough and considerate healthcare law, but the time to transition the country to a new healthcare system.
  • The President hosted a luncheon on July 19 for GOP senators, urging them to repeal Obamacare, certainly, but preferably to repeal AND replace. He recommended they cancel their August recess and remain in Washington until a reform bill was finalized.
  • On July 20, Republican senators reopened negotiations on their BCRA legislation, resulting in a second revision which removed the Cruz Amendment* and retained some tax measures included in the Affordable Care Act. Still failing to attract the 50 Republican votes needed to bring the BCRA to the floor for debate and a vote, Senator McConnell announced there would be no replacement in the coming days, and the Senate would proceed to vote on repealing the ACA with a two-year delay. This latest piece of proposed legislation became known as the Obamacare Repeal Reconciliation Act, a repeal-only bill.
  • July 25 and 26 saw marathon debating in the Senate over whether to disassemble Obamacare completely, resulting in the Senate’s rejection of a full ACA repeal without replacement. At this point, Senator McConnell needed to round up 50 Republicans that would back a final bill in some shape or another.
  • On July 27, a “skinny repeal” was debated in the Senate. This legislation, also known as the Health Care Freedom Act, would have repealed the individual and employer mandates contained within the ACA, as well as the medical device tax, and cut off funding to Planned Parenthood. With enough support behind the skinny repeal, Senator McConnell would have been able to introduce a repeal and replace bill to a conference committee with the House, where a more comprehensive proposal could then be negotiated with House Republicans.
  • In the early morning hours of July 28, the Health Care Freedom Act failed to acquire the necessary number of votes, with Senator John McCain (R-AZ) being one of its most vocal opponents. McCain is now urging his colleagues to send the bill back to committee, listen to feedback from both sides of the aisle, as well as our nation’s governors, and “produce a bill that finally delivers affordable health care for the American people”.

With the failure of this latest bill, it appears that Obamacare will remain in effect for now.  However, the President is still hopeful that the Affordable Care Act will be repealed and ultimately replaced. Only time will tell what sort of legislation will be crafted by Congress and presented to the President for signature. As your benefits compliance experts, MidAmerica will continue to monitor the status of healthcare reform and ensure you are aware of any effects new legislation could have on your retirement and healthcare benefit plans.

MidAmerica’s focus is on public sector employers and their ability to provide quality benefits solutions to their employees while meeting their own budget objectives. We provide the guidance, tools, and resources that our clients and partners require in order to effectively administer their retirement and health and welfare plans. We are committed to keeping you informed, and we will provide updates on this topic as they become available.

 

*The Cruz Amendment, spearheaded by Senator Ted Cruz (R-TX), would allow insurance companies to sell plans that do not meet minimum ACA coverage requirements, provided there is at least one plan offered that will meet coverage requirements.

Promoting Employee Wellness

Posted on July 24, 2017

It’s widely known that work-related injuries and illnesses, chronic diseases, absenteeism, and sick employees who return to work before getting well negatively impact the bottom line of companies of all sizes. According to the CDC Foundation, these occurrences cost U.S. employers billions of dollars each year. With healthcare costs continuing to rise, employers have realized that improving employee health and wellness is an effective way to lower costs, improve productivity, and decrease absenteeism. By now, you may have realized the advantage of embedding wellness into your own workplace culture. If not, you may want to consider how you can promote good health and fitness among your employees, and the potential long-term benefits to both your company and your workforce.

What is Workplace Wellness?

The CDC (Centers for Disease Control and Prevention) defines a workplace health program as “a health promotion activity or organization-wide policy designed to support healthy behaviors and improve health outcomes while at work”. Wellness programs can focus on issues such as smoking cessation, diabetes management, weight management, and preventative health screenings, among many others.

Workplace wellness programs also embrace policies aimed at promoting employee health, including time allowances for exercise, providing on-site kitchens and eating areas, stocking the vending machines with healthy food options, and offering financial and other incentives for participation. Effective wellness programs and supportive policies are those that successfully motivate employees to not only care about their health but to actually take steps to maintain and/or improve it, which in the long run can positively impact employers, employees, their families, and communities at large.

Why Workplace Wellness?

Wellness programs sponsored by employers promote long-term employee health and reduce total insurance spending. These programs allow an employer to offer premium discounts, cash rewards, gym memberships, and other incentives to participate. Employers can provide a supportive environment to encourage their workers to adopt healthier lifestyles, which can in turn result in reduced claims, increased productivity, and fewer sick days. When employees commit to taking better care of themselves, they can benefit physically, emotionally, mentally, and financially.  Health and wellness can have an impact on the bottom line of all concerned.

Rewarding the Positive

The 2016 Employer Health Benefits Survey conducted by the Kaiser Family Foundation states that 83% of large firms (200+ employees) offer

a wellness program that supports smoking cessation, weight management, or behavioral/lifestyle coaching. Forty-two percent of these large firms offer financial incentives for participation, such as lower premium contributions and cash to employees. Incentives are key to the success of a wellness program, and can be incorporated into the program by rewarding employees for attaining certain health-related goals, such as completing a health risk questionnaire or a biometric screening. Competition and one-on-one coaching are also common features of wellness programs.  The PwC Health and Wellbeing Touchstone Survey from June 2016 shows that program participation increases when incentives are added to the mix.  For example, when a health screening was offered with no incentive, participation was at 40%, as opposed to 57% when an incentive was involved.

Is it All Worthwhile?

In any business, employers are keen on seeing a return on their investments. With wellness programs, employers tend to see ROI in tangible ways, such as reduced absenteeism and a reduction in certain medical claims (e.g. urgent care visits instead of emergency room visits).  An added benefit is that employers will often see an increase in the Value of Investment (VOI), indicated by increased loyalty, employee retention, and a boost in employee morale.

According to findings from the International Foundation of Employee Benefit Plans Workplace Wellness 2017 Survey Report, employers that offer and measure their wellness initiatives experienced increases in both ROI and VOI, with 92% of workplaces that offer wellness programs reporting their initiatives to be very or somewhat successful.

Decreased Absenteeism 50%
Financial Sustainability/Growth in the Organization 63%
Increased Productivity 66%
Increased Employee Satisfaction 67%

The IFEBP 2017 survey results also seem to indicate that responding employers are not primarily concerned with controlling or reducing health-related costs. In fact, the adjacent graphic illustrates that 75% of respondents were more concerned with improving overall health and well-being. Employers are increasingly realizing that wellness is more than just physical health.  It also impacts the health of the organization, employee productivity, and overall happiness. Employees that feel empowered to take better care of themselves should experience less stress in their lives both on the job and off, creating happier, more productive employees.

It seems clear that wellness is “shaping up” to be a key area of investment and strategy for employers year after year.  Creating a healthier work environment may be a critical piece of your organization’s success.  Introducing wellness programs can show your employees that you are their partner, which is likely to be a win-win for both you and your workforce.

6 Retirement Planning Mistakes to Avoid

Posted on July 14, 2017

When you hear the words “retirement planning”, do you experience feelings of excitement, or dread? For most individuals, it’s probably the latter. That’s unfortunate because retirement planning is a financial goal that most of us have to face, and its importance cannot be overstated. When it comes to planning out the financial state of your golden years, you’ll want to make sure you get it right, because there are no “do-overs” in retirement. The outcome may mean independence and financial freedom if you’ve done your homework, or poverty and financial stress if you haven’t.

Much has been written about the basic principles of Retirement Planning 101, such as:  Have a Plan, Be Sure to Save Enough, Be Sure to Save Early Enough, and Don’t Rely on Social Security. Let’s focus here on some other pitfalls that you’ll want to avoid falling into:

  1. Spending instead of rolling over. A very basic rule of financial planning is to never withdraw money saved in a tax-deferred account until after you retire. Unfortunately, many workers who switch jobs early in their careers cash out their 401(k) plans rather than rolling them over to an IRA, meaning they are paying taxes on the money as well as a 10% penalty for being under age 59½. What may seem like a negligible amount of money will actually compound over many years into a significant savings. Cashing out early eliminates this compounding opportunity.  You can see for yourself by trying this free compound interest calculator provided by FinancialMentor.com.
  2. Taking advice from friends and family on how to invest. You trust your friends and family members for advice on many different topics, such as the best new restaurant in town or where to spend your next vacation. But when it comes to money matters, you’re better off consulting with a certified financial planner and registered investment advisor. Not that your friends don’t have your best interests in mind, but they probably aren’t aware of the many tax laws and retirement investment strategies that need to be taken into consideration when handling your personal financial situation. It’s best to leave that to the experts.
  3. Believing you’ll want to work forever. When you’re in your 40s and 50s, enjoying good health and vitality, it’s easy to predict that you’ll want to continue working into your 70s. However, circumstances can change and health conditions can emerge, causing you to rethink that plan to keep on working. Working part-time or even launching a second career after retirement are great ways to feel productive and engaged, but this earned income should be considered a bonus to your lifestyle, not a necessity.  It’s problematic to plan your retirement security on earned income such as this, because you may realize you don’t want to work as long as you once thought you did.
  4. Ignoring inflation. Costs continue to rise, so the money you have today will buy much less 10 and 20 years from now. It’s important that you take the rate of inflation into account when forecasting your budget and managing the distribution of your retirement assets, to ensure that you calculate a realistic amount of income to sustain you years from now. Try out this inflation calculator, provided by Prudential, to see how inflation will affect your spending dollars over time.
  5. Starting Social Security too early. Early retirement benefits are available at age 62 but there is a financial bonus for collecting Social Security later rather than sooner. The earlier you begin collecting benefits, the less you can expect to receive. Waiting until you reach the full benefit age – which depends on the year you were born but let’s say age 66 for the sake of argument – will ensure an additional 8% benefit for each year you delay collecting benefits. If you wait until age 70, your benefit will be 32% higher because of that delay. It may be tempting to begin your Social Security benefits early to guarantee a source of income, but it may be wiser to start spending down your retirement savings first, and thereby delay taking Social Security. Of course, this is dependent upon how much of a nest egg you have accumulated.
  6. Spending too much early in retirement. You have your freedom now to spend your days as you choose, enjoying your hobbies and not having to cram your vacation into a one week window. But here’s a word of caution – your money has to S-T-R-E-T-C-H and you have no way of knowing for how long. When you’re in the early stages of your retirement, any assets still invested have time to continue to grow. Overspending at this time creates two issues – the loss of the money for one thing and the potential returns that money would have garnered over the next 20 years or so. It’s important to consult with a financial planner long before you retire, to formulate a budget that accounts for your projected pension, retirement accounts, and Social Security. And then stick to it.

When it comes to your retirement planning, prepare yourself to face it head on. Become financially educated so you have the confidence to make sensible decisions. Consult with a professional and make a prudent game plan. There is too much at stake to not take this seriously. All the years you worked and saved depend on the decisions you make as you enter this stage of your life.  Having the financial skills to make wise choices puts you on the road to the financial security you deserve.

While tradeshows can be a great way to source valuable new ideas, learn about new products, and form valuable partnerships, we all know even the most disciplined attendee can be distracted from their objective. Each year, we attend or exhibit at dozens of conferences across the country, so we understand the desire to socialize with friends we haven’t seen in a while, or the allure of exploring foreign cities. However, we all want to leave the conferences with valuable contacts, information, or tools that make us more successful in our personal and professional lives. There’s no denying that the giveaways, luncheons, after-parties, and games are all great ways to network, learn, and have some fun, but it’s important to have an exhibit strategy.

Here are some tips for getting the most out of your conference experience:

  1. Have a plan of action

    Before you leave for the tradeshow, consider the challenges your organization is currently facing.- Are there looming budget cuts?

    -Are you unhappy with your current vendor?
    -Do you need to find a more efficient way to perform a cumbersome task?
    -Is there possibly new technology you could implement to increase efficiency?
    -Are your facilities in need of updates?

    Understanding your current challenges will help you formulate a game plan for exploring the exhibit aisles, making sure you make the most of the typically limited time you have to speak to vendors.

  2. Visit companies you know

    This is a great opportunity to connect, or in some cases reconnect, with the companies that already have your business. Speaking with a representative face-to-face about your experiences with the company can not only open up dialogue about how the company can better service you, but also improves your overall relationship with them.

  3. Visit companies you don’t know, but might want to

    Our advice is to research the exhibitors beforehand and make notes on the possible vendors or providers you’d like to visit. The exhibit hall can sometimes be overwhelming, so having a loose itinerary of the companies you definitely want to learn more about will make your exhibit day experience more manageable.

  4. Grab plenty of literature

    Take advantage of the literature the exhibitors provide. A lot of the information is not only intended to sell the company’s specific product, but to inform you on trends in your industry or solutions similar organizations have found beneficial. Takeaways are also great reminders of the companies you visited during your whirlwind of a day, and can facilitate discussions once you’re back in the office.

  5. Attend breakout sessions

    Breakout sessions are often times the greatest value add for attendees of a tradeshow. Take advantage of the fact that there are so many subject matter experts in one place for you to learn from. As with exhibitor lists, tradeshows will typically share the breakout session schedule ahead of time, so be sure to factor that into your plan of action.

  6. Ask questions

    Don’t be afraid to ask the booth representatives questions. That’s why they’re there, after all. Any representative worth speaking with will be more than happy to take time to speak with you about your unique issue and how their company can help. Many will even offer to host post-exhibit discussions to facilitate a more in-depth conversation. If it’s a product that could really help your organization save time or money, take them up on the offer! The worst that could happen is you decide you’re not interested in what they can provide.

  7. Make connections / network

    Sometimes networking can be awkward – we get it. Speaking with people you don’t know may not come naturally to you, but tradeshows are the perfect opportunity to exercise your networking skills because everyone there is open to conversation. Plus, you already have something in common with the attendees and exhibitors – your industry. Use that to your advantage. Spark a conversation with someone while standing in line for a drink, pay attention to people’s name badges (which usually have the person’s organization, title, and name listed – a built-in icebreaker), and know that all of the exhibitors want nothing more than to talk to you. The beauty of networking is you never know when a seemingly meaningless conversation can lead to a mutually beneficial relationship.

Tradeshows are intended to bring a large assortment of solutions uniquely designed for your industry together in one place. Spending just a little bit of time game planning beforehand, and executing on a simple strategy can ensure that you not only have fun, but bring back valuable information for the betterment of your organization and your career. Visit every booth, grab literature (and the coveted giveaway!), listen to all of the great speakers, and don’t be afraid to ask questions. Using these tips will help you get the most out of your tradeshow experience, so that you can bring ideas and solutions back to work, along with that tote bag filled with free swag.

The MidAmerica team will be at the upcoming Texas Association of School Business Officials (TASBO) Summer Conference from June 19 – 21 in Galveston, Texas. The exhibit hall is open on June 20, so stop by booth 10 and say hello!

Do you make a lump sum payment upon retirement for your employees’ unused sick leave, vacation pay or other early retirement incentives? If you do, there is a way to increase the value of the benefit for your employees, while saving money for both of you. Instead of disbursing a check, you can implement a Special Pay Plan (SPP) or a Retiree-Only HRA.

A Special Pay Plan is an interest-bearing 401(a)/403(b) retirement account that is set up by you in your employee’s name. You make deposits/contributions into this account in lieu of disbursing a check for your employee’s unused sick leave, separation of service pay or other retirement incentive pay.

Special Pay Plan

The funds deposited into the Special Pay Plan can be invested in a guaranteed fixed interest account, which can be for any expense. How does this help increase the value of the benefit? You and your employee will permanently save 7.65% on FICA taxes. For example, if the benefit amount is $10,000, your employee will take home the entire $10,000 less income tax, saving $765 in FICA. And since you pay FICA on their behalf, you will also save $765 on each employee that receives the benefit.

Funds in a Special Pay Plan will be available at age 55 for retired employees without an early withdrawal penalty. If an employee is at least age 55 at the time of retirement and remains separated from service, they can access the funds prior to age 59 ½ without penalty. This account is tax-deferred, meaning that an employee is not taxed until they withdraw funds. This is beneficial to them because if their tax-bracket is lower after retirement, they could potentially save on tax when they withdraw funds.

Retiree-Only HRA

A Retiree-Only Health Reimbursement Arrangement (HRA) is another way that school, city and county employers can choose to increase the value of the benefit. This is also an interest-bearing, employer-funded account created in the employee’s name. Deposits can be made completely tax-free (not subject to FICA, Federal or State income taxes) so your employees can receive 100% of the value of each benefit dollar.

By using a Retiree-Only HRA, employees would be reimbursed tax-free for their eligible medical expenses and/or premiums including dental and vision. The account balance rolls over each year. Retirees have the flexibility to choose which eligible expenses to submit for reimbursement and when to submit. Upon the retiree’s death, their spouse and any qualifying dependents can use the remaining HRA balance for eligible medical expenses and premiums.

Employers who implement one of these plans should be aware of the potential change in regulations. The IRS has proposed 457(f) regulations which may affect schools’, cities’ and counties’ sick leave and unused vacation payouts at retirement. It is unclear whether these plans would be considered a “bona fide” or a type of non-qualified deferred compensation. If the plans were deemed deferred compensation, employees would be subject to tax liability equal to the value of the unused leave. It has been stated that the final 457(f) regulations will most likely not be out this year but will be released at a later date. Stayed tuned to our blog for updates on this issue.

The proposed 457(f) regulations have been on our minds for the last several months.  While a change in regulations seems all but certain, the IRS has now indicated it is highly unlikely the regulations will be finalized this year.  The agency has been working to draft an adequate safe harbor for determining whether a leave plan is considered bona fide under the proposed tax-exempt deferred compensation regulations.  According to a source within the IRS Office of Associate Chief Counsel, there has been an inability to reach an agreement on the terms of a safe harbor, delaying the ability to finalize the proposed regulations.

The proposed 457(f) changes can pose significant effects on both employers and employees, with additional taxation being perhaps the most noteworthy effect.  To recap, IRS Code Section 457(f) provides rules to determine when an arrangement is a deferred compensation plan, and whether that plan qualifies for favorable tax treatment.    It also clarifies the definition of a bona fide sick and vacation leave plan.

What’s the Possible Impact?

Many public sector employers offer generous programs that allow employees to exchange unused sick leave and vacation time for cash payout at retirement.  If the IRS determines that payouts such as this are considered deferred compensation, both employees and employers would face a tax liability determined by the value of unused leave balances.

So what does this mean for you?  Here are some of the major concerns:

  • A portion of accrued leave in non-qualified plans may be subject to taxation.
  • Employees may lose a valuable benefit, and employers could have difficulty attracting quality talent.
  • The administrative, compliance, and staffing burden for HR departments may increase.
  • Employees will likely feel compelled to use all of their sick and vacation days, creating an unstable environment in the workplace and HR hurdles.

What Have We Learned?

Fortunately, the same IRS source mentioned above expressed optimism about the guidance that will eventually be dispensed, offering that the IRS does not wish to ban “cash for employee leave” programs.  The IRS does appreciate the need for a clear ruling and the organization is earnestly working to finalize an opinion.  It is expected they will release guidance on the 457(f) regulations in conjunction with other related guidance, but it may be too ambitious to expect these releases would be made by the end of this year.  Rest assured that MidAmerica will continue to monitor the situation, and provide updates on this topic as they become available.

For more information on potential implications of the 457(f) regulations, CLICK HERE to view our webinar.

If you have any questions on how you can prepare for potential regulatory changes, email Trent Teesdale, SVP of Business Development, at trent.teesdale@midamerica.biz.

It’s a never-ending battle.  Healthcare costs continue to rise.  As an employer, how do you cope?  If healthcare costs are rising, that means employee health benefit costs are rising.  You want to provide a valuable benefit for your employees, to retain and attract good talent.  For job seekers, the strength of an employer’s benefits package can be as valuable as the salary, even more so if they have dependents.  Employers have to become creative in their financial strategies to limit benefit costs.

How are employers dealing today?  Here are 4 strategies that some have adopted:

  1. Introduce higher premiums or employee cost-sharing.  This is a short-term tactic which shifts more of the financial burden to the employee.  Although it’s counter-productive for drawing talent, it is still a frequent tactic.  Employee cost-sharing offers several options, including higher deductibles and out-of-pocket maximums, moving from a fixed-dollar co-pay to a percentage-based co-insurance model, increasing employee cost for using non-network providers, and increasing employee cost for using brand name prescription drugs over generics.
  2.  Level-funding company healthcare costs.  You’re probably familiar with the traditional fully insured plan and the traditional self-funded plan.  Level-funding is a hybrid of the two, whereby the plan is filed as a self-funded plan, and the employer pays a fixed and unchanging premium per employee each month.  However, after one or two years, the plan is evaluated to see if the employer qualifies for a refund of premium if claims were lower than expected.  Likewise, the premium may increase at renewal if claims were higher than expected.  With a bit of ingenuity and planning, the employer could simultaneously implement other methods to encourage behavioral changes that lead to healthier lifestyles among employees, allowing the employer to realize premium refunds rather than increases.  Which leads to….
  3. Health and wellness initiatives.  This method of cost containment is becoming increasingly more common.  Employers have realized that improving employee health and wellness is an effective way to lower healthcare costs and improve productivity.  The key to the success of these programs is the use of incentives, such as rewarding employees for participating in a program or attaining certain health-related goals, such as smoking cessation.  Wellness programs should be tailored to the individuals, meeting them where they are in order to realistically assist them in reaching healthy goals.  Another important condition is the need to measure employee engagement.  If you know who is and who isn’t participating in the program, you will have a better understanding of how to implement incentive-based initiatives for the future.
  4. Consumer-driven health plans.  Typically, we are talking about Health Reimbursement Arrangements (HRA), Health Savings Accounts (HSA), and even Flexible Spending Accounts (FSA).  These plans allow employees to access funds to cover higher cost-sharing provisions in exchange for lower monthly premiums.  With employees being more engaged in the cost of healthcare services, they become better consumers.  They may be more inclined to consider the necessity of higher-cost healthcare in certain situations, e.g. going to an urgent care facility vs. the hospital emergency room. Further, this greater insight into how healthcare dollars are spent may also persuade them to make positive behavior changes in their lifestyles, leading to significant reductions in health plan spending year over year.  This is a win/win for both employer and employee.  Below is a breakdown of the differences between the 3 types of consumer-driven plans.

 

  Health Care FSA HRA HSA
What is it? It’s an account to help employees pay for eligible medical expenses. It’s an account to help employees pay for eligible medical expenses. It’s a personal bank account to help employees save and pay for qualified medical expenses.
How do you get it? Enrollment is through the employer if they offer an FSA.  There is no need to enroll in a health plan. It’s usually connected to a health plan.  If the employer offers an HRA, enrollment is automatic when signing up for the health plan. Requires enrollment in a high-deductible health plan that meets a deductible amount set by the IRS.  Other IRS guidelines must be met in order to be eligible.
Who contributes to it? The employee.  The employer can also contribute if they choose to. The employer.  Employee contributions are not permitted. The employee, their family, the employer, and anyone else that chooses to.
How is the money put into it? The employer will deduct money from the employee’s paycheck, before taxes, and put it into the account. The employer may contribute on a monthly basis, or may fund the entire contribution amount at the beginning of the plan year. The employee can make deposits just like a personal bank account.  Family & the employer can also contribute.  Employee may be allowed to deposit pre-tax money from paycheck.
What happens if I don’t spend all the money in one plan year? The employer may choose to allow a carryover up to the IRS limit of $500. The employer may allow a certain amount to be carried over into the new plan year. Since the employees owns the account, the money will remain until they choose to spend it.
Can I keep the money if I leave my job? No.  The employer keeps the money. No.  The employer keeps the money. Yes.  The employee owns the account.
When can I start using the funds? The employee can start spending down the FSA on the first day of the plan year. Different types of HRAs each have their own rules as to when funds can be accessed.  The employer will set the rules. The employee can start spending down the HSA once enrolled in a high-deductible health plan and has opened the account.
Do I have to pay taxes on the money? No No No
What can I pay for with it? Medical expenses that are determined by the IRS & the employer.  This includes dental, vision, and many other health care services and supplies as listed under Section 213(d) of the Internal Revenue Code. Medical expenses that are determined by the IRS & the employer.  The employer may only allow the HRA to pay for services covered by your health plan.  Some HRAs can be used to pay for dental, vision, & other services/supplies listed under Section 213(d) of the Internal Revenue Code. Qualified medical expenses, including services covered by a health plan as well as expenses listed under Section 213(d) of the Internal Revenue Code.
Can I have other accounts with it? Yes.  The employee can have an HRA or a dependent care FSA. Yes.  The employee can have a healthcare FSA and/or dependent care FSA. Yes.  The employee can have a limited-purpose FSA or limited-purpose HRA, which can only be used for eligible dental and vision services.

While health insurance premiums will continue to rise, employers have options to potentially reduce escalating costs while still providing a valuable benefit to their employees and encouraging employees to become more invested in their own healthcare.  If you’d like to learn how FSAs and HRAs can help you achieve your financial goals, contact us today at accountmanagement@midamerica.biz.

 

MidAmerica Administrative & Retirement Solutions has been providing retirement solutions since 1995, and health and welfare programs since 2002.  Our goal is to maximize benefit dollars for both the employer and the employees.  Our staff of highly experienced subject matter experts, ease of technology, and streamlined administration enable us to reach this goal.  Please contact us if you’d like assistance in reaching your goals.

 

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